Eli Lilly & Co. (NYSE:LLY)

The liquidity position, as indicated by the current, quick, and cash ratios, exhibits fluctuations over the observed period. Generally, the ratios demonstrate a cyclical pattern with periods of improvement followed by declines, and then a recent upward trend. A review of each ratio provides further detail.

Current Ratio

The current ratio began at 1.27 and generally decreased through the end of 2022, reaching a low of 0.94. The ratio then increased to 1.35 by March 31, 2024, before fluctuating between 1.11 and 1.55 over the subsequent quarters. The most recent value, as of December 31, 2025, is 1.58, representing the highest point in the observed period. This suggests an improving ability to cover short-term liabilities with short-term assets.

Quick Ratio

The quick ratio follows a similar pattern to the current ratio, declining from 0.77 to 0.52 between March 31, 2022, and December 31, 2022. It remained relatively stable in the 0.57 to 0.63 range through March 31, 2024. A notable increase is observed from September 30, 2024, reaching 0.78 by December 31, 2025. This indicates an improving ability to meet short-term obligations with the most liquid assets, excluding inventory.

Cash Ratio

The cash ratio demonstrates the most significant fluctuations. It decreased from 0.18 to 0.10 between March 31, 2022, and December 31, 2022. The ratio remained low, fluctuating between 0.10 and 0.14, until September 30, 2024. A substantial increase is then observed, rising to 0.24 by September 30, 2025, followed by a slight decrease to 0.21 by December 31, 2025. This suggests a recent strengthening in the company’s immediate ability to cover current liabilities with cash and cash equivalents.

Overall Trend

From 2022 through early 2024, all three ratios generally trended downward, indicating a potential weakening in liquidity. However, beginning in the first half of 2024, all three ratios began to improve, with the cash ratio showing the most dramatic increase. This suggests a recent focus on strengthening the company’s short-term liquidity position. The upward trend in all three ratios towards the end of the period is a positive indicator.

The current ratio exhibited fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio decreased from 1.27 to a low of 0.94 before recovering and demonstrating an overall upward trend towards the end of the period.

Initial Decline (Mar 31, 2022 – Dec 31, 2022)

From March 31, 2022, to December 31, 2022, the current ratio experienced a consistent decline, moving from 1.27 to 1.05. This suggests a relative increase in current liabilities compared to current assets during this timeframe. The most significant decrease occurred between June 30, 2022 (1.10) and December 31, 2022 (1.05).

Recovery and Volatility (Mar 31, 2023 – Dec 31, 2023)

The ratio showed a recovery in the first quarter of 2023, reaching 1.30 by March 31, 2023. However, this was followed by volatility, decreasing to 0.94 by December 31, 2023. This period indicates potential challenges in maintaining short-term liquidity, with the ratio falling below 1.0, suggesting that current liabilities exceeded current assets at the end of 2023.

Subsequent Improvement (Mar 31, 2024 – Dec 31, 2025)

From March 31, 2024, the current ratio demonstrated a sustained improvement, increasing from 1.35 to 1.58 by December 31, 2025. This indicates a strengthening of the company’s short-term liquidity position. The most substantial increase occurred between March 31, 2025 (1.37) and September 30, 2025 (1.55). A slight decrease was observed from September 30, 2025 (1.55) to December 31, 2025 (1.58), but the ratio remained robust.

Overall Trend

Despite interim fluctuations, the current ratio generally improved over the entire period. The initial decline was reversed, and the ratio concluded at a higher level than its starting point. This suggests improved management of current assets and liabilities, ultimately bolstering the company’s ability to meet its short-term obligations.

The observed fluctuations warrant further investigation into the underlying drivers of changes in both current assets and current liabilities to fully understand the dynamics of the company’s liquidity position.

The quick ratio for the analyzed period demonstrates fluctuations, generally trending downwards through the first three quarters of 2023 before exhibiting some recovery. Initial values indicate a reasonably healthy short-term liquidity position, which subsequently experiences periods of increased strain before stabilizing and improving towards the end of the observed timeframe.

Overall Trend

The quick ratio began at 0.77 in March 2022 and generally decreased to a low of 0.52 in December 2022. A slight recovery occurred in the first quarter of 2023, reaching 0.79, but was followed by another decline to 0.58 by September 2023. The ratio then showed a consistent upward trend, reaching 0.78 in December 2025.

Short-Term Fluctuations

Significant quarterly variations are apparent. The ratio decreased from 0.77 to 0.66 between March and June 2022, then recovered to 0.70 by September 2022 before declining again. Similar patterns of decline followed by partial recovery are observed throughout 2023 and into 2024. The most substantial increase occurred between September 2025 (0.73) and December 2025 (0.78).

Asset and Liability Dynamics

Total quick assets increased overall from US$10,265 million in March 2022 to US$27,423 million in December 2025. However, current liabilities experienced a more substantial increase, rising from US$13,386 million to US$35,228 million over the same period. The ratio’s fluctuations are directly attributable to the differing growth rates of these two components. Periods of ratio decline coincide with faster growth in current liabilities compared to quick assets.

Recent Performance

The latest reported values indicate a strengthening liquidity position. The quick ratio increased from 0.62 in September 2024 to 0.78 in December 2025. This suggests improved ability to meet short-term obligations with highly liquid assets. The increase in the quick ratio in the most recent quarters is driven by a larger increase in quick assets than in current liabilities.

In conclusion, while the quick ratio experienced periods of weakness, the trend towards the end of the analyzed period suggests improving short-term liquidity. Continued monitoring of both quick assets and current liabilities is recommended to maintain a healthy financial position.

The cash ratio, representing the ability to meet current liabilities with only cash and cash equivalents, exhibits fluctuations over the observed period. Initially, the ratio demonstrates relative stability before experiencing a notable decline and subsequent recovery, followed by another period of fluctuation.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The cash ratio begins at 0.18 and gradually decreases to 0.12. This suggests a weakening in the company’s immediate liquidity position as current liabilities grew at a faster rate than total cash assets during this timeframe. The decline, while present, remains within a relatively narrow range.

Recovery and Subsequent Fluctuation (Mar 31, 2023 – Dec 31, 2024)

A recovery is observed in the ratio, peaking at 0.22 in March 2023, indicating an improved ability to cover short-term obligations with available cash. However, this improvement is not sustained. The ratio then declines again, reaching a low of 0.09 in June 2025. Throughout this period, the ratio fluctuates between 0.10 and 0.14, demonstrating instability.

Recent Trend (Sep 30, 2025 – Dec 31, 2025)

The most recent period shows a significant increase in the cash ratio, rising from 0.24 in September 2025 to 0.21 in December 2025. This suggests a substantial improvement in the company’s immediate liquidity, likely due to a significant increase in total cash assets. This recent increase partially offsets the prior decline.

Overall, the cash ratio demonstrates a pattern of initial decline, recovery, and subsequent fluctuation. The recent increase in the ratio is a positive development, but the preceding instability warrants continued monitoring. The company’s ability to consistently maintain a healthy cash ratio appears to be influenced by the relative changes in cash assets and current liabilities.